Wednesday, February 27, 2008

Shock and Awe.

That is what I felt last night upon hearing that a friend of a friend sold a piece of art and ended up with pure profit of over $100,000.
Now it's not like this person just lucked out and bought a Picasso at a yard sale-- she is involved in the art world professionally, and apparently spent more than she could really afford to buy the piece 10 years ago. During those 10 years, the art market has been particularly strong, and the artist became better known. So I guess it's some combination of luck and savvy and connections, but still... wow.
The interesting thing is that no one would have talked about this, probably, if she'd just sold a stock. When people make money off of tangible investments, it becomes more public. People will talk about the profits from selling an apartment they've lived in, and in this case, I guess it was okay to talk about something that had been sitting in her living room for years and suddenly wasn't there any more. And I'll bet it was a lot prettier to look at than a Vanguard statement!

12 comments:

"Future Millionaire" said...

What do you mean art is prettier than a Vanguard Statement. I hang my Vanguard above my fireplace. lol

Seriously thought I do get a big kick out of checking my financial statements each quarter, a lot more than my Thomas Kinkade On Rainbow Row Painting that's above my sofa.

Anonymous said...

Mass produced Thomas Kinkade crap, I mean paintings, are not the kind of art that is a good investment anyway.

Anonymous said...

Interesting that you post this now...

I was at a function last night when, in front of a large group of people, an acquaintance asked if I owned or rented? When I bought? And then proceeded to ask detailed questions about how much money I've made over the years on my property while I tried to be vague and change the subject. I was uncomfortable because I know that at least half the people there have not purchased homes yet, not to mention that she was basically talking about my bottom line!

PS. It's been a year and you're still a daily read. Keep up the great blogging:)

Anonymous said...

I am an architect and I took a lot art classes at school. I believe I have an "above average" taste to tell what's a good painting and what's not. Alas, I am surprised to find out some good artists never have the opportunity getting appreciated, while some artists, showing horrible in skill and theme and whatever are really hot. For most of us who can not afford Picasso, it's much risky to buy a mediocre artist and hope we will find a gold mine. If you want to decorate your living room, buy whatever you like (as long as you can afford). But in my opinion, Vanguard fund is a much more reasonalbe investment still. Though I am have the same pain and lost these days.

English Major said...

I don't know if I'd buy a piece of art hoping to sell it at a profit--partially because I don't know enough about the art market to think I could really do that well, and partially because I don't like thinking of art like a stock certificate (although, actually, I have a friend who collects vintage stock certificates for their aesthetics...). I do, however, have a stake in a family trust that consists of my grandfather's paintings, which hopefully will have appreciated by the time I want to send my kids to college.

escapee said...

wow- that is great. Our art is the only thing in our house that has any value. I buy pieces because I like them, though, and not for investment (although some did cost quite a bit). The funny thing about it is that most of our other stuff is crappy- crappy old TV, crappy old stereo, etc. We always laugh if a burglar broke in that they'd probably leave US something because our stuff is so junky and old. They wouldn't have the sense to know that all of the original art on our walls is the only thing in the house worth something!

Anonymous said...

Agree with others that to buy art as an investment vehicle is a dicy proposition.

What I'd like to know, though, is what kind of return that $100K profit represents. If your FOAF paid a million for that artwork, then...well, a 10% gain over ten years is pretty lousy, speaking purely in financial terms.

Madame X said...

I don't know how much she paid originally, but it sounded like it was quite a bit less than $100k. Certainly not $1 million! She supposedly sold the piece for more than twice what she paid for it.

RacerX said...

Then using my mad Jr High Algebra she paid $100K for it ($200K sold -$100k paid = $100k profit!)

You're impressed huh!

I would buy art because I like, and if it goes up great, if not OK. I am still happy.

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Anonymous said...

Interesting, if she actually sold the piece for double what she bought it for, then given that she had it for 10 years, she only made a return of a little over 7 percent per year. That's less than the average return of the stock market over time.

To Madame X's point in the orginal post, is this was a stock then no one would care, she didn't even beat the market.

emilyg said...

Wow...that is an investment that really paid off. While I bet everyone would love to do that sort of thing, I agree that luck and knowledge of the art world are a huge part of it.
Kudos to her, though, for having the ability to pull that off!